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Earnings results: Salesforce shares tumble after slashing earnings and sales forecasts over first major share buyback program

Salesforce Inc. executives cut their forecasts for the year and expected third-quarter results to be worse than Wall Street expected on Wednesday, while promising for the first time a multi-billion dollar share buyback.

Salesforce CRM, +2.28% reported second-quarter profit of $68 million, or 7 cents per share, on revenue of $7.72 billion U.S. dollars, up from $6.34 billion a year ago. After adjusting for stock-based compensation and other effects, the cloud software company reported earnings of $1.19 a share, down from $1.48 a share a year ago. Analysts on average expected adjusted earnings of $1.03 per share on sales of $7.69 billion, according to FactSet.

While results beat expectations, Salesforce executives missed expectations. For the third quarter, which will include September’s annual Dreamforce conference — the company’s main revenue driver — Salesforce executives guided adjusted EPS of $1.20 to $1.21 on sales of $7.82 billion to $7.83 billion One hundred million U.S. dollars. Analysts on average expected third-quarter adjusted earnings of $1.28 a share on revenue of $8.07 billion, according to FactSet.

For the full year, Salesforce executives lowered their annual forecasts, now calling for adjusted EPS of $4.71 to $4.73 on sales of $30.9 billion to $31.0 billion, previously The forecast is for $4.74 to $4.76 per share. Revenue was $31.7 billion to $31.8 billion three months ago. Executives trimmed their annual revenue guidance slightly three months ago, but raised their forecast for adjusted earnings.

Shares fell 6.7% in after-hours trading on Wednesday and closed up 2.6% at $180.62.

Analysts had expected persistent concerns about business spending and other issues, such as a stronger dollar, to keep Salesforce from raising its guidance.

“While we expect solid F2Q results, we believe Salesforce will take the approach that other software companies have been taking, namely, on revenue, ‘beat and meet’ or ‘beat and reduce’ ratio’ Beats and raises’ more likely,” the Evercore ISI analyst wrote ahead of the earnings report, while maintaining a $250 price target on the stock.

Salesforce did set out its first major stock buyback program, committing $10 billion to buy its own stock.

“We are pleased to launch our first share repurchase program to continue delivering incredible value to our shareholders, allowing us to achieve $50 billion in revenue in FY26 ,” Co-CEO Marc Benioff said in a statement. He added on a conference call with analysts that the buyback program has not taken M&A activity “off the table.”

While cloud software growth continues, concerns remain in the months ahead. Analysts believe companies are looking to cut costs and roll out any spending amid economic concerns, which could punish Salesforce and other software names.

“We’re witnessing a more cautious buying environment,” Salesforce Inc.-CEO Bret Taylor acknowledged on a conference call with analysts late Wednesday.

Salesforce CFO Amy Weaver noted that as the quarter ended, the sales cycle extended and the number of tiers of deal approvals increased, especially in North America and key regional European markets.

Oppenheimer research “suggests that Salesforce remains a long-term enterprise market share gainer, but Salesforce’s near-term enterprise spending plans are generally under pressure from macro uncertainty,” analysts said late last week Wrote sometime in the preview of the earnings report, while maintaining an Outperform rating and a $240 price target. “As growth becomes harder, growth investments in digital transformation are gaining traction, but companies are also rationalizing operating cost structures, which are lengthening sales cycles.”

Salesforce shares fall So far this year, the Dow Jones Industrial Average DJIA +0.18% — which counts Salesforce as one of its 30 components — is down The S&P 500 index SPX, +0.29% fell 13.4%.



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